ORANGE, Conn. — September 27, 2023 — Avangrid, Inc. (NYSE: AGR), a leading sustainable energy company and member of the Iberdrola Group, and Vitol Inc. today announced that they have reached a landmark transfer agreement for an estimated $100 million of 2023 production tax credits (PTCs) from eight operating wind farms, totaling 1,134 megawatts of generating capacity. The agreement marks one of the largest publicly announced deals to-date since the passage of the Inflation Reduction Act (IRA), and it cements Avangrid as an early mover in single year as-generated credit transfers.
“The Inflation Reduction Act offers an unprecedented stable framework, enhancing the attractiveness of renewables,” said Pedro Azagra, Avangrid CEO. “It has created a tax credit transfer process that is streamlined and removes the bottleneck that existed with the tax equity investment structure. We expect this transaction to serve as a reference point in this rapidly expanding market. The transfer ensures that we receive greater value from our renewable energy projects, and it will allow us to pay down debt and make further capital investments to benefit our customers.”
“We are delighted to partner with Avangrid through this tax credit investment, part of Vitol’s broader strategic investment in renewable resources and the energy transition,” said Rick Evans, CFO of Vitol Inc. “This new tax credit transfer mechanism promises to unlock significant pools of new capital to support investment in renewable resources.”
The IRA created a new transferable credit framework to help developers monetize PTCs. Under the IRA, renewable energy owners like Avangrid who qualify for tax credits but are not able to use them immediately can transfer credits to a third-party investor, such as Vitol. Prior to the IRA, this was only possible through a tax equity partnership, which requires a lengthy diligence and negotiation process as well as significant transaction costs.
The 2023 PTCs included in the transfer agreement with Vitol are from eight of Avangrid’s wind farms:
- Baffin Bay
- Desert Wind
- Klondike II
- La Joya
- Twin Buttes II
Avangrid expects to continue active participation in PTC transfers and will continue to push at the edges of this developing market.
Avangrid is the third largest wind operator in the United States with 8.6 gigawatt of installed capacity and is leading the development of the country’s large-scale offshore wind market. Avangrid operates a robust portfolio of 75 wind and solar facilities in the country and has a presence in 24 states. These facilities are not only helping states reach their environmental goals by generating clean electricity and reducing carbon emissions but are also constantly bringing important benefits to the communities where we operate by creating local jobs and boosting economic growth.